Cargo Transport Trends Reflect General Economic Stagnation

25 december 2015

Experts of the Analytical Center continue to explore the topic of transport services. The new issue of the Bulletin on social and economic crisis headed ‘Cargo Transport Trends in Russia’ presents an analysis of key trends and current dynamics in the country’s cargo transportations.

The Bulletin does not consider transport optimization
issues. The focus is on the response of the industries to production decline
and probable consequences for the country’s economy. The specific nature of
cargo transportations (unlike passenger transportations) is such that
cargoes do not make decisions and their intensity reflects only the objective
situation with regard to the availability and volumes of contracts for
the supply of raw materials and power products and transportations of
finished products.

‘Trends in cargo transport reflect the general situation of
stagnation in the country’s economy, but there is nothing dramatic there’,
experts consider. For example, in autumn growing exports of coal contributed to
higher volumes of its transportations by railways. The level of activity
of the processing industry influences the volumes of cargo transportations,
while export flows depend on the mining industry.

Experts note that pipelines have a narrow range of
application as a mode of transport as they are mainly used to transport crude
hydrocarbons, as well as oil products and some types of chemical products.
Supplies of crude oil and gas dominate in the structure of such transportations
in Russia, and the cargo turnover and the cargo volume have been showing a
stable trend in 2013-2015. According to experts, there is a certain ‘division
of labor’ between railways and pipeline transport with respect to oil cargo in
Russia. Supplies of oil and oil products by rail were 256 mln tons in 2014 and
497 mln tons through Transneft’s pipelines. The experts further explain that
rail transport excluding pipelines accounted for over 85% of cargo turnover in
Russia in recent years, i.e. railways have been winning the competition for
long distance cargo delivery. In terms of tonnage, fossil coal is the first in
this transport mode accounting for 26% of all cargoes.

Concerning road transport, the average distance of road
carriage was 44 km in 2013 and most of it was performed by own transport,
rather than transport companies, according to the experts. They believe that
the poorly developed road infrastructure hampers the development of road cargo
carriages.

The experts also note that water
transportation decreased between October 2013 and October 2014. Their
volumes dropped from 12.8 to 10.8 mln tons per month for that period subject to
seasonal adjustment. Thereafter, carriages stabilized at the level of 11 mln
tons per month, but a further reduction could be expected due to the continuing
decline in construction industry, according to experts. However, air cargo
transportation has been demonstrating a slight growth tendency in Russia
in 2012-2015, yet if the economic situation degenerates further, the general
decrease in business activity may pose a risk for such ctransportation.